Game cuts profit forecast as Xmas sales disappoint

12 Jan 2010

Computer games retailer the Game Group has cut its profit forecast on the back of disappointing Christmas sales.

Game, which operates 1,400 stores under the ‘Game’ and ‘Gamestation’ brands across Europe, including Ireland, and Australia, now expects its pre-tax profits for the full year to the end of January 2010 to be between £87 million and £93 million.

“This will be the second-best profit performance in the group’s history, although it is below market expectations,” the group said.

Game said the negative trends in the PC and video-games market had continued over the key Christmas selling period “despite strong software releases and a sizeable installed base of hardware”. Much of the decline is due to a fall in revenues from the Nintendo formats, it said.

This, when combined with the impact of customers shopping later, resulted in a like-for-like sales declines of 13.8pc for the group over the past five weeks.

“Since Christmas, however, we have seen significant improvement as customers have responded well to our mint and pre-owned sales offers and the release of new software,” Game said.

Strong schedule of new releases

Looking towards the 2010/2011 period, the games retailer said it expects the video-games market “to continue moving towards higher margin software and new peripheral technology, to supply an unprecedented installed base of consoles in the market”.

However, it said its board remained “mindful” of the macro-economic environment and the trends in the PC and video-games market. This combination of factors means that revenues are likely to decline year-on-year, Game said.

The group noted that there is a strong schedule of new releases in the first half of 2010 including Mass Effect 2 from EA, Splinter Cell: Conviction from Ubisoft, Bioshock 2 from Take Two, and God of War 3 from Sony.

Microsoft and Sony have also announced they will each launch new motion sensing technology, with Microsoft recently confirming that Project Natal for the Xbox 360 will launch this November, Game added that “we anticipate that the new technology in 2010/11 will lead to increased consumer choice and benefit Game as customers seek expert advice and specialist service.”

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